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Choice architecture and nudging

Inspired by our class discussion on the 29th of January about nudging, I will in this blog post explore how leaders can be “choice architectures” and affect their workers choices. “Social roles are a component of sociology, the study of human behaviour. Social roles are defined by the type of influence that other people can have on one person’s behaviour. They are the part that people play within a social group.” Each social role is a set of rights, duties, expectations, norms and behaviours that a person has to face and fulfil. There are a lot of different social roles, and one person can have a diverse set of roles depending on the setting. In many settings one may play the role as a “choice architect”. Choice architecture is a term used by Cass Sunstein and Richard Thailer in the book, “Nudge: Improving Decisions about Health, Wealt, and Happines”. Their definition of a choice architecture is a person who has ” the responsibility for organizing the context in which people make decisions.”

Even though people in general should make choices based on their own will, it’s common that individuals get affected by other people around them. Many studies confirm this, for example in a study named “Asch conformity experiment”. Male college students participated in a simple “perceptual” task. In reality, all but one of the participants was “confederates” (i.e., actors), and the true focus of the study was about how the remaining student (i.e., the real participant) would react to the confederates’ behaviour. The result was quite interesting, when the people around the test persons answered wrong to really easy questions, more than 1/3 of the test persons also failed to answer the question right. This shows how easily people get affected, and this is something Sunstein and Thailer explore in their book. One important term the author’s use in the book is “libertarian paternalism”, which is some kind of new political ideology. The basic idea is that private and public institutions might nudge people in directions that will make their lives better, without eliminating freedom of choice. The paternalism consists in the nudge; the libertarianism consists in the insistence on freedom, and on imposing little or no cost on those who seek to go their own way.

In neoclassic economy, individuals act rational and narrowly self-interested actors, they also have the relevant information need to make decisions. We all know that this type of people in general doesn’t exist; people don’t always make the decisions that are best for them. For example, many people eat unhealthy, doesn’t exercise enough, smoke to much etc. The two authors believe in the design features of both legal and organizational rules, and how this can influences on the choices made by those affected. The key thing about a nudge is that it’s noncoercive and there’s always an option out.

Many socials roles imply that you’re a choice architect, it doesn’t matter if it’s an individual, an organization or the government, they can all impact the choices people take. Faced with important decisions about their lives, people often make bad choices. One of the fundamental goals of any HR-manager is to find efficient ways to motivate the employees in the organization and to engage them doing their very best. But the simple truth that employees cannot perform as hoped if they are not healthy. Poor health is costing business billions of dollars annually in health-care premiums and other related costs. People spend a lot of time at work, so how can leaders effect their workers to for example be more healthy, or save more money for the retirement?

For instance many people never get around to joining their employer’s retirement savings plan, even when it is heavily subsidized. Leaders can for instance create default plans for their employees. Employees would be able to adopt any plan they like, but, if no action is taken, they will automatically be enrolled in an expertly designed program. Another examples is how an organization can affect the health of their workers. What an organization choice to put in their cafeterias and how the food is placed affect what their employees eat. If they have a lot of unhealthy food placed right in front of them, obviously the workers will eat it, in lack of alternatives and laziness to find the healthy food. Removing vending machines with soda subsided gym fees, making elevators only for people with disabilities and encourage employees to use the stairs. These small changes can affect many, by making these changes leaders act as a choice architect and help their workers be more healthy. We can argue that a healthy employee is a more productive employee. Leaders should definetly have in mind that people often get affected by their enviroment and that people often choices the option where they dont need to do anything, Paying attention to choice architecture and using the nudge approach can be a good way for leaders to improve the workspace, and also boost the productivity, but it is important to find the right balance. Or else the employees may feel controlled.